Briefing Good Neighbours? - Community impacts of supermarkets - June 2005
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June 2005 Briefing Good Neighbours? Community impacts of supermarkets
Good Neighbours?
The last fifty years have seen major changes in the way that people buy their food.
Fifty years ago most people bought their food from markets or specialist food shops,
such as greengrocers, butchers and fishmongers. Today, £76bn is spent on
groceries, and more than 80 per cent goes to supermarkets. These are huge
corporations; Asda Walmart is now the world’s largest company by turnover, while
Tesco takes one in every three pounds spent in the UK. This briefing looks at the
economic and social effects of the competitive policies of large supermarket chains,
and the subsequent impacts on local communities in the UK.
The rise of the supermarkets
The characteristic retail outlet for large supermarket chains is the superstore, typically more
than 25,000 square feet in size. The number of superstores in the UK rose from 733 to
1,147 between 1990 and 19981. Smaller, independent shops struggle to compete with the
buying power and aggressive pricing policies of these big supermarkets – in 1995 there were
230,000 banks, Post Offices, pubs, grocers, and corner shops in Britain. By 2002 there
were 185,000, and it has been projected that there will be just 140,000 by 20092. The rate of
loss of independent shops is increasing - a recent study by the Institute of Grocery
Distribution revealed that 2,157 independent shops went out of business or became part of a
larger company in 2004, compared with a previous annual average of around 300 a year.3
During the last twenty years, a range of alternatives to supermarkets have developed,
including farmers’ markets, farm shops, direct sales and delivery schemes. And when
added to traditional shops and food markets, there is still a great variety of ways of buying
food. But all of this variety is under threat from the aggressive sales tactics of the big
supermarkets.
In addition, supermarkets are now muscling in on non-food markets such as clothing,
electrical goods, books and CDs, as well as financial and other services, such as
pharmacies and photo development. It is clear that the big supermarkets see these goods
and services as key to their continuing expansion. They are aiming to compete directly with
the entire range of shops found in our towns and high streets.
Eroding Choice
Supermarkets claim that they provide choice to consumers, but in reality they often erode
real choices for people: a recent Mintel survey4 of shopping patterns commented that
“arguably the biggest threat to smaller towns and the high street is increased provision of
convenience items by major grocery superstores.” By dominating food sales, they take
away the choice to shop in traditional shops such as greengrocers and butchers; they make
it hard for new schemes to start and expand; and by targeting non-food shops they could
take away the choice to visit a thriving town centre. Several companies, in particular
Sainsbury and Tesco, are also buying up independent convenience stores.
Tesco already controls nearly 30 per cent of the grocery market5, and in areas where it is
also buying up convenience stores, its market share may be even higher6. If this trend
continues, the only choice available to consumers will be between Tesco or Asda, Sainsbury
or Morrison’s; in the worst cases shoppers may only have the choice to go to different size
stores of the same chain.
Supermarkets provide a ‘one size fits all’ solution to retailing, but communities contain a
2Good Neighbours?
huge diversity of people with different needs and demands. There are already many
different formats for buying food (including but by no means limited to):
• Traditional specialist stores such as greengrocers, butchers, fishmongers.
• Local corner shops and convenience stores
• Traditional markets and the newer farmers’ markets
• Farm shops, pick-your-own and direct sales
• Food co-operatives and box delivery schemes
Providing genuine choice should be about making provision for this diversity, rather than
stifling it. Supporting this diversity also brings local economic and social benefits.
But supermarkets can use very aggressive tactics to remove local competitors. The
Proudfoot chain in North Yorkshire is a long-established local business. When Tesco
opened a store in Withernsea, they sent money-off vouchers to local households giving them
40% savings at Tesco. Ian Proudfoot, owner of Proudfoot stores, asked the Office of Fair
Trading (OFT) to investigate, claiming that Tesco was trying to put him out of business, but
the OFT saw nothing wrong in Tesco’s behaviour7. Recent reports suggest they are
repeating this approach in several cities with discount offers to customers. Local retailers
are angry at what they say is an aggressive, anti-competitive tactic8 - even successful
businesses can struggle to compete against such activities.
Supermarkets are also increasingly moving into non-food goods, such as clothes, electrical,
garden equipment, medicines, household goods and so on. The New Economics
Foundation has been researching the decline of all types of independent retailers, revealing
the extent of supermarket and chain store takeover of the high street.9 One of the worst
towns surveyed had only one independent shop – the rest were chains. In contrast Hebden
Bridge, in West Yorkshire, has only three chain stores. Their report states that ‘many town
centres...have lost their sense of place and the distinctive facades of their high streets’. High
streets dominated by ‘identikit chain stores’ also have fewer categories of shop than towns
that have resisted the invasion of chain stores and supermarkets.
Impacts on the local economy
Independent shops are part of the local economy and often support their local community.
Many independent stores buy their supplies locally, and this can help the local economy. A
Friends of the Earth study of local food schemes10 including farm shops, farmers' markets,
box schemes and community supported agriculture found that on average just over 50 per
cent of business turnover was returned to the local economy, usually in the form of spending
on local produce and inputs, staff wages and money spent at other local shops and
businesses. This compares very favourably with supermarkets, which may siphon as much
as 95 per cent of their takings away from local areas to shareholders and distant
corporations11.
• In Hove, Brighton, Tesco opened a large superstore in 2003, and the company
claims that this attracted 30,000 new customers. Yet local traders feel that they are
worse off12. They have seen falls in takings and the new store ate up land previously
used for a car park, while the store’s own parking is only for two hours, giving
customers little time to shop anywhere other than Tesco.
3Good Neighbours?
• A study in Fakenham, found that town-centre food retailers experienced a 64 per
cent decline in market share following the opening of an out-of-town supermarket.
The number of convenience food stores fell from 18 to 13, and the number of vacant
shops rose by 33%13
The impact of the closure of local shops can be widely felt, as they often exist in a network
with other local businesses. A survey of shopkeepers around the town of Saxmunden in
East Suffolk14 was carried out in 1998 when a new Tesco store was proposed. It found that
67 out of 81 food retailers in seven market towns and 19 villages, employing 548 people,
predicted they would go out of business if the Tesco store opened. The survey reported that
this would lead to the loss of a further 295 related local jobs.
And it is unlikely this lost local business will be picked up by supermarkets. It has been
estimated that, using a definition of local food as coming from within 30 miles of the store, it
is typical for supermarkets to have only 1-2 per cent of turnover from local food providers15.
In contrast, Friends of the Earth’s study of local food schemes16 found that most of them sold
food directly from their own land, and where they were unable to do this they were going to
considerable effort to source locally. 94 per cent of the businesses sourced produce from
within a thirty mile radius, and nearly a quarter of them sourced most or all of their food
locally.
Edge of centre superstores
As supermarkets have found it increasingly difficult to get permission for out-of-town
superstores, there has been an increasing move towards locating them at the edge of town
centres. The impacts of such developments are highly dependent on exactly how and where
they are sited.
One Government-commissioned study17 highlighted the case of a superstore classed by
planning authorities as edge-of-centre, which was actually so far away from the main centre
it was difficult to get between the two for linked shopping trips. The study concluded that the
current definition of an ‘edge-of-centre’ store as being 200-300m from the centre (as used by
planning authorities) was likely to be too wide for smaller market towns.
Ease of access is also important – it’s not just a case of distance, but also the way that
access is laid out and how easy it is for pedestrians to make their way from the superstore to
the town centre; a large road in the way will deter many people. The Government study in
fact concluded that “the principle effect of the new stores was to divert trade from the town
centre to the edge-of-centre locations”18. Parking restrictions in supermarket car parks (for
example restrictions to two hours’ parking) can also discourage shoppers from visiting other
shops.
In other words, rather than leading to spin-off shopping, edge-of-centre has the potential to
produce ‘spin-away’ effects, where shopping is drawn away from the existing centre. Even a
study by a supermarket (Somerfield) bears this out. In 1996, their survey of 12,000 people
doing their main shop at a Somerfield store at 33 sites found that for every pound spent in
one of its town centre stores, an average of 46 pence was spent at other nearby shops19.
But at edge-of-centre stores this linked spending more than halved to 21 pence for every
pound spent at the supermarket. At out of town locations it fell even further to just 10 pence.
4Good Neighbours?
Bringing in Jobs?
Supermarket companies claim that all these impacts should be overlooked because they are
providing jobs for local people. Tesco and Asda Walmart have been using this argument to
gain planning permission for so-called regeneration sites – putting up large superstores in
deprived urban areas. Any opposition to the new store can be quickly overcome by the
promise of jobs in areas where they may be very hard to come by. For those people who do
escape long-term employment for a job at a new superstore there is no doubt this must be
beneficial, but the question is whether there are wider costs. Do the supermarkets really
provide extra jobs?
Supermarkets usually herald plans for new superstores with the claim that they will bring
hundreds of new jobs. Considering how many new stores have been opened, this should
add up to a significant increase in employment nationally. But the figures don’t add up.
Supermarkets are very efficient companies, particularly when it comes to the productivity of
their staff. One study, which compared national retail employment between 1991 and 1995
against employment claims made by the supermarkets noted that while grocery retail sales
grew in that period by 12.3 per cent, grocery retail employment did not grow by the same
amount – just 2.7 per cent growth20. So while the businesses grow, numbers of staff do not
grow as fast. As the author of the study commented, the “extra jobs have simply evaporated
in the competitive process”.
Another way to look at this question would be to consider how many people would be
employed if grocery sales were not dominated by supermarkets, but were instead in the
hands of smaller grocery stores. In 2004, small grocery shops had a total turnover of around
£21 billion and employed more than 500,000 people21. The big supermarket chains have
much bigger sales (Tesco alone has a turnover of £29 billion) yet they only employ around
770,000 people22. So the supermarket chains control more than 80% of the grocery market
and yet they employ only 50% more staff than small shops. The simple conclusion is that
small shops are better for employment than having a superstore. Any council wanting to
increase local employment would be better off encouraging new local food
businesses than trying to attract a supermarket.
Supermarkets have not just reduced employment, they have also affected the quality of life
for other business owners, for example through extended opening hours. A survey of
working conditions for self-employed retailers in 200323 found that more than half of
shopkeepers did not take any holiday at all during the year, 67% said they worked a seven
day week and 68% were working 12 hour days.
Impacts on local people
The loss of local, independent shops can cause serious problems in terms of access to food,
particularly for people on lower incomes or those who don’t have the use of a car. A recent
survey24 of shopping habits found that there is a strong bias towards use of local shops in
less affluent urban areas, including council estates and multi-ethnic low-income areas. It
also found that people in these locations were more likely to use local shops for their main
shopping. So if local shops close down, the effects are more likely to be felt by those who
may already struggle to get their food each week.
Another study25 looking at access and choice for food shopping in Portsmouth found that
people on low incomes, including elderly residents, felt that their lives had not been made
5Good Neighbours?
easier by the large scale development of supermarkets and the loss of local shops. Many
felt they had been forced into dependence on supermarkets due to the loss of local shops,
while at the same time the supermarkets did not cater to their needs because they are set up
primarily for affluent car users. The study found that, because of the loss of local shops,
people without a car had to make special arrangements to do their shopping, including
expensive options such as getting a taxi.
The takeover of convenience stores by supermarkets has also led to problems, particularly
where they have been closing ‘in-store’ post offices, leaving local communities without easy
access to a post office. This hits the elderly and infirm particularly hard. A pensioner in
Witney, where the local post office was due to be closed by Tesco commented “I am a
pensioner and disabled and will be in difficulty if Cogges Post Office closes…It seems to me
that the community is being sacrificed to the god of money”26.
Impacts can also go beyond loss of local services – ‘just-in-time’ delivery by supermarkets
can mean multiple daily visits from supermarket trucks in areas not designed to support
them. A new Tesco Express in Kew, South London, led to deliveries arriving between 4am
and 11pm with consequent noise and traffic disruption. Following discussions with the
council and residents, Tesco agreed to restrict deliveries to between 8.30am and 7pm,27 but
has so far failed to honour this agreement28.
And a father and daughter in Manningtree, Essex, have attempted to get an Anti-Social
Behaviour Order served on Tesco after becoming frustrated with noise from refrigeration
equipment at a neighbouring Tesco Express. The council had already taken out a noise
abatement order against the store, but Tesco has lodged an appeal, which could be a
lengthy process. The father commented “While this appeal is being dealt with my daughter
and I are virtually unable to leave windows open, use the garden and go about our normal
daily lives without the intrusion of continual noise”29
Drowning out democracy?
“They are too big and powerful for us. If we try and deny them, they will appeal, and we
cannot afford to fight a planning appeal and lose. If they got costs it could bankrupt us.”30
John Sweeney, leader of North Norfolk District Council
Supermarkets can use aggressive tactics to get their own way with councils as well. On
paper, there are often grounds for local authorities to refuse permission for a new
supermarket, but supermarket chains succeed because they have such large resources at
their disposal. Threats of legal appeals can frighten cash-strapped councils into giving in. In
the case of Sheringham, North Norfolk, Tesco has taken 8 years to win approval against a
determined campaign by local people opposed to the superstore. In other cases, Tesco
prepares the ground, purchases land and gets agreement with council officials well before it
seeks planning permission, making it hard to refuse.
‘These guys are professionals and are in for the long haul. They have plenty of experience
from around the country in winning planning permission – from PR campaigns in the local
press to planning experts and expensive lawyers. What can we, a bunch of amateurs, do to
stop them?’ A local resident from Dorset 31
Local people can find it hard to make their voices heard or their wishes taken into account.
In Leyton, East London, many local people wanted a disused railway yard, which after 30
6Good Neighbours?
years had turned into woodland, to be turned into a community woodland32. But the site was
actually turned into an ASDA superstore, a deal clinched by ASDA with the provision of
£1million for a new road.
But this doesn’t mean that local people can’t fight back: many communities have managed to
resist superstore applications. For example, in Norwich there has been a long campaign to
prevent a new Tesco opening in the Unthank area of the city. The application was recently
turned down as a result of local opposition and the clear evidence that the new store would
have created traffic and congestion problems. As local campaigners say; “For many, many
reasons we believe that a proposed shop would severely reduce the quality of life in an area
that we enjoy living in. Our neighbourhood is special and we want to keep it that way.”33
Conclusion
It is clear that big supermarkets don’t usually make good neighbours. There are often
significant social and economic impacts associated with the opening of new supermarkets.
But there are plenty of things consumers can do to support their local food economy and
avoid large supermarkets.
• Support local independent retailers, and encourage them to stock locally produced food.
• Support local food schemes such as farmers’ markets, box schemes and farm shops.
• Grow your own fruit and vegetables.
• Keep an eye on local planning proposals and applications and press the council to
ensure retail developments have a full environmental, economic and social impact
assessment.
But supermarkets must also be made accountable for their impacts.
• More robust planning policies and decisions are needed to prevent damaging
developments, congestion and transport increases and to protect town centres and high
street shops.
• Local authorities must take steps to protect retail diversity through, for instance, local
development plans, regeneration, or consideration of rate relief for small shops.
• Measurable and binding targets are required to make supermarkets reduce their waste
and transport impacts
• A strict Code of Practice is needed to ensure that supermarkets are treating all suppliers,
including farmers, fairly.
• A supermarket watchdog must be created to ensure that the grocery market is operating
in the interests of consumers, farmers and small retailers.
• There should be a moratorium on any further mergers and takeovers until the
competition authorities have conducted a market study to consider the wider impacts of
supermarket power on society and have examined the issue of local competition.
• Corporate accountability legislation should be introduced to make companies
accountable for their impacts on communities, workers and the environment worldwide
7Good Neighbours?
Also see our new briefing Checking out the Environment: environmental impacts of
supermarkets, June 2005 and our extensive materials on planning at
http://www.foe.co.uk/resource/local/planning/
References
1
Competition Commission (2000). A report on the supply of groceries from multiple stores in the United
Kingdom. Stationery Office, UK
2
Guardian, 16/12/02, p.7, ‘Ghost town Britain looms’
3
Institute of Grocery Distribution (2005) Convenience Retailing
4
Mintel (2002) Out-of-town versus In-town retailing Special report, September 2002
5
The Grocer. 9th April 2005
6
Friends of the Earth (2004) Press Release: Tesco cleared for London stores takeover. 5 March 2004.
http://www.foe.co.uk/resource/press_releases/tesco_cleared_for_london_s_05032004.html
7
Letter from Office of Fair Trading to Ian Proudfoot, 2004
8
The Grocer. 30th April 2005
9
New Economics Foundation (2005). Clone Town Britain: the Survey Results, nef London
10
La Trobe H (2002) Local food, future directions Friends of the Earth, London
11
de Selincourt, K. 1997. Local harvest: delicious ways to save the planet. Lawrence and Wishart, London.
12
The Grocer. 7th February 2004. ‘In the shadow of a giant’ pp. 38-39
13
Office of the Deputy Prime Minister (1998). Impact of large foodstores on market towns and district centres
http://www.odpm.gov.uk/stellent/groups/odpm_planning/documents/page/odpm_plan_606124.hcsp
14
Lady Cranbrook (1998) Food Webs. Quoted in the Competition Commission (2000) Supermarkets: A report
on the supply of groceries from multiple stores in the United Kingdom.
15
Rachel Shabi (2004). The Price Isn’t Right. Guardian Unlimited – Special Report: Supermarkets 26/01/04
16
La Trobe H (2002) Local food, future directions Friends of the Earth, London
17
Op cit 13
18
Op cit 13
19
Quoted by Competition Commission (2000) Supermarkets: A report on the supply of groceries from multiple
stores in the United Kingdom, Vol 2 para 13.74
20
Thorpe D (1999) Superstores and employment in retailing John Lewis Partnership
21
The Grocer. 15th May 2004. p 26
22
Baker N (2004) How green is your supermarket? 2004 figures combined for ASDA, Co-op, Marks &
Spencer, Morrisons, Safeway, Sainsbury, Somerfield, Tesco and Waitrose.
23
The Grocer 17th January 2004. ‘Independent retailers’ holidays grow shorter’ p 9
24
Mintel (2002) Out-of-town versus In-town retailing Special report, September 2002
25
Clarke I et al. (2004) Retail competition and consumer choice. Lancaster University Management School
briefing report.
26
Friends of the Earth (2004) MP Briefing: Every little hurts: Why Tesco needs to be tamed.
http://www.foe.co.uk/resource/briefings/every_little_hurts.pdf
27
Richmond & Twickenham Times, 4 February 2005. Tesco delivers pledge to cut noise.
http://www.richmondandtwickenhamtimes.co.uk/search/display.var.567363.0.tesco_delivers_pledge_to_cut_noi
se.php
28
Richmond & Twickenham Times, 18 February 2005. Residents angry as superstore delivery lorries breach
council agreement.
http://www.richmondandtwickenhamtimes.co.uk/search/display.var.571832.0.residents_angry_as_superstore_de
livery_lorries_breach_council_agreement.php
29
East Anglian Daily Times, 8 April 2005. Family fed up at noise from store.
http://www.eadt.co.uk/homeStory.asp?Brand=EADONLINE&Category=NEWS&ItemId=IPED07+Apr+2005+
18%3A03%3A55%3A130
30
Brown P (2004) 'Secret deals with Tesco cast shadow over town' The Guardian 22/1/04
31
A local resident from Shaftesbury, Dorset. Personal communication to Friends of the Earth
32
Letter to Walthamstow Guardian, 21 November 2002.
http://walthamstowguardian.co.uk/views/letters/display.var.652849.index.site_was_once_a_lovely_woodland.html
33
http://www.stopunthanktesco.com/
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